Decentralized local energy trading in microgrids with voltage management

Abstract

Local energy trading in microgrids is one of the emerging concepts in the area of distribution networks. A proper business model is required to manage local energy trading. The pricing mechanism is crucial because the agreed energy price determines the benefits of local energy trading. Designing a proper pricing mechanism with a specific objective considering the privacy of agents and respecting physical network constraints is a challenging task. This article proposes a decentralized algorithm for local energy trading in microgrids with an integrated pricing mechanism considering welfare maximization and network voltage management through local information exchange among neighbors. The proposed algorithm guarantees that the energy transactions do not violate voltage constraints in a physical network and agents’ privacy is preserved. A two-stage approach is proposed to achieve fast convergence and increase the practicability of the algorithm. The simulation results are presented to verify the effectiveness of the proposed approach.